Friday, April 23, 2004

As a result of the California state budget crunch, the CSU system has taken some hits. Its funding from the state has been reduced, and fees – i.e., tuition – have had to increase. Naturally, the California Faculty Association (the teachers’ union of which I am an unwilling member) vigorously opposes all this. I received a CFA flyer in my mailbox this week announcing a rally against cuts, and one of its slogans has been sticking in my craw for a couple of days now: “Fee Increases ARE Tax Increases.”

That’s not just an overstatement; it’s about as nearly opposite the truth as I can imagine.

First, taxes are involuntary payments, usually made irrespective of whether the payer receives any service in return. Fees, or at least these fees, are voluntary payments (you only pay them if you attend a CSU institution), and the payer is the direct recipient of the educational benefits.

Second, CSU students receive a massive subsidy. According to some estimates, it costs around $10,000 per academic year to enroll one student full time, whereas the fee is about $2400. So the typical student is receiving a subsidy of about 75% off the cost of education. A fee increase is not a tax; it’s a reduction in the size of the subsidy. When people say student fees have increased by 58% in recent years, they’re referring to the fact that fees used to be around $1500 and have risen to about $2400. To put that in perspective, the size of the subsidy has dropped from about 85% to about 75%. (Incidentally, these figures don’t take into account inflation. In real dollars, the percentage increase would be a good bit less than 58%.)

Third, for the actual taxpayers, a fee increase is an alternative to a tax increase. If the fees did not increase, the only way CSU could keep its funding would be through increased taxes or borrowing (and of course, borrowing just means more taxes from future taxpayers). Raising fees is thus a way to avoid taxing the rest of public – you know, all those people who are not getting a heavily subsidized education – even more.